Magic Delivers Strongest Quarter Ever with Double-Digit Increases in Revenues and Operating Income

Revenues for the first quarter of 2018 increased 15% year over year to a record-breaking $69.7 million; Operating income increased 19% year over year to a record-breaking $7.6 million; Non-GAAP operating income increased 16% year over year to a record-bre

Revenues for the first quarter increased 15% to $69.7 million compared to $60.8 million in the same period last year.

Operating income for the first quarter increased 19% to $7.6 million compared to $6.3 million in the same period last year.

Non-GAAP operating income for the first quarter increased 16% to $9.7 million compared to $8.4 million in the same period last year.

Net income attributable to Magic's shareholders for the first quarter increased 7% to $4.6 million, or $0.10 per fully diluted share, compared to $4.3 million, or $0.10 per fully diluted share in the same period last year.

Non-GAAP net income attributable to Magic's shareholders for the first quarter increased 7% to $6.2 million, or $0.14 per fully diluted share, compared to $5.7 million, or $0.13 per fully diluted share, in the same period last year.

Cash flow from operating activities for the first quarter amounted to $7.3 million compared to $10.5 million in the same period last year.

Magic is reiterating its fiscal year 2018 guidance issued in February for full year revenues of between $283 million to $293 million on a constant currency basis, reflecting annual growth of 10% to 14%.

“Our record-breaking results speak for themselves, demonstrating that Magic has continued the forward momentum of a very strong 2017. Our fiscal year 2018 is off to an excellent start driven by the continued high demand for our products and professional services across all of our regions and markets.

“In keeping with our successful strategic direction, we remain focused on expanding our customer base as we continue to evolve our portfolio with powerful and innovative technologies in the fields of software application development, mobile, cloud, big data, and especially in integration, which I believe will account for the majority of an organization’s digital transformation efforts,” added Bernstein.

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Magic believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Magic's financial condition and results of operations. Magic's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Magic urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.

Non-GAAP measures used in this press release are included in the financial tables of this release. These non-GAAP measures exclude the following items:

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